blackfriars bridge evening

Bumpy sleigh ride for Sterling

20th December 2019 Market Update

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🇬🇧 GBP –  After a choppy but positive morning, Sterling suffered heavy losses yesterday afternoon against all major currencies following the Bank of England interest rate decision and statement. The two members who called for a rate cut in November maintained their stance but failed to convince any of their colleagues to join them. The accompanying statement attempted to dismiss market concerns that a rate cut is on the horizon, but it wasn’t enough to support the Pound as analysts still predict a cut at the next meeting. Sterling is now on track for its worst week of 2019.
Today will be a busy end to the week for traders with the possibility of volatility stemming from both economic and political sources. GDP readings for Q3 will be published at 09:30 but it would be a surprise if the figures deviate from expectations as it is the final and therefore, most accurate reading. Johnson will also bring his amended Withdrawal Bill back to the newly elected Parliament which should pass easily. Sterling reacted negatively when the clause was announced earlier this week to remove the option of extending the transition period, therefore, making a no deal Brexit more likely.

🇪🇺 EUR – The Eurozone did not publish any economic data yesterday which meant the Euro had a very quiet day. It largely moved according to external events rather than forcing market direction of its own.

Today looks to be a similar story with only minor data being released. However, analysts are expecting the Euro to fall against the US Dollar on a technical rather than fundamental basis by looking at the moving averages of the pair.

🇺🇸 USD –  The US Dollar was flat through early trading hours yesterday before picking up in the afternoon. The Greenback was able to withstand poor Philly Fed Manufacturing and Jobless Claims results to move higher against Sterling and the Euro.

GDP results for Q3 are eagerly awaited by markets today which are released at 13:30. Personal Consumption Expenditure results are published at 15:00 and both of these measures are expected to show an overall positive picture and may help the US Dollar to finish the week strongly. If the current support levels are broken versus the Pound, the US Dollar could make significant gains over the Christmas period.

 

Summary:

GBP: Familiar Brexit risks cause heavy Sterling losses
EUR: Single currency is quiet heading into Christmas
USD: Well supported ahead of GDP results

 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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